Custom «PepsiCo, Inc» Essay Paper

PepsiCo, Inc. is one of the world's leading manufacturers of carbonated soft drinks. The company’s history started in 1893 when Caleb Bradham, a pharmacist from the North Carolina, was trying to create his own soft drink to sell it in his drugstore. The young pharmacist’s experiments turned out to be successful, and the "Brad's Drink" was introduced. On August 28, 1898 the drink was renamed to "Pepsi-Cola" composed of the names of the two main ingredients – pepsin and cola nuts. Pepsi became popular in the shortest time, and on June 16, 1903 Bradham registered Pepsi-Cola as a trademark. Originally created as a pharmaceutical mixture, Pepsi was advertised by Bradham as exhilarating, restorative, and digestive drink. In 1905, the brand got its new logo, which was the first change of the original since 1898. The next year the trademark was registered in Canada, then in Mexico.

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Soon the company experienced its first crisis and in 1923, due to the increase of sugar prices as a result of the First World War, Pepsi-Cola has gone bankrupt with its assets sold. In order to register bankruptcy, Brad Caleb Davis not only had to submit to the Federal Court the secret syrup recipe, but also to confirm the validity of this information under oath. Eight years later Pepsi-Cola’s revenues have plummeted, and it became bankrupt again. In 1928, the company was nationalized by the state, and its name changed to "National Pepsi-Cola Company". After a while, the state sells the company to Charlie Guth, the president of large confectionery company "Loft Incorporated". In 1930's, using the Great Depression’s dry law, Pepsi-Cola organized the successful attack on the Coca-Cola’s leading market positions. Pepsi-Cola started to sell 12-ounce bottles for 5 cents while Coca-Cola’s 6-ounce bottle cost the same 5 cents ("Pepsi Legacy Book" 6). This fact made Pepsi-Cola become extremely popular among children. In 1940, the company officially changes its name to "Pepsi-Cola Company" and becomes registered in Argentina.

Pepsi contributed to the development of the advertising history by creating the first promotional song, which eventually became a hit and was translated into 55 languages. The changing economy forced the Pepsi-Cola Company to raise prices to the competition level and to modernize its logo again. FundingUniverse states that World War II served as a kind of impetus to the company’s development. In 1941, Pepsi-Cola placed the tricolor image of the crown on its bottles, making it clear to all Americans that the company supports U.S. troops. At this time, Pepsi-Cola overtook such beverages as Royal Crown and Dr. Pepper, which helped it to become the second most popular drink after Coca-Cola. In the early 1950s, Coca-Cola was 5 times ahead of Pepsi-Cola.

After a long advertising of Pepsi as a cheap drink, it was known as "kitchen cola", which prompted the company to struggle for its brand’s image improving. Pepsi started to identify the company with the young and trendy buyers by introducing a new slogan "Be Sociable, Have a Pepsi" ("Pepsi Legacy Book" 9). Pepsi-Cola Company responded the changes of post-war history and presented its product as a trademark owned by the younger generation – "Pepsi Generation". "Come Alive! You’re in the Pepsi Generation" slogan was the first attempt in the advertising history to emphasize not only the product’s characteristics but to show them through the customer’s mood and lifestyle. In the mid-60s, this slogan has gained a classical youth-oriented look "You’re the Pepsi Generation".

In early 1965, the Pepsi-Cola Company incorporated with salty snacks’ manufacturer "Frito-Lay, Inc." and changed its name to "PepsiCo" which exists until today. The new company employed approximately 19 000 people and had 510 million dollars of annual sales. In the mid-70s, PepsiCo held an unprecedented promotion campaign called "The Pepsi Challenge" by arranging the taste tests between Pepsi and Coca-Cola. The tests’ results proved that Pepsi-Cola was preferred by the most of the participants, which was immediately announced on the TV and helped to increase the brand’s popularity in the future.

In 1984, Wayne Kellovey became PepsiCo’s president and the company started the new and very successful advertising campaign "Pepsi. The Choice of a New Generation" with Michael Jackson in it. There were also few other musical campaigns with such famous TV and music stars as Michael J. Fox, Billy Crystal, Tina Turner, Lionel Richie, Cindy Crawford, and many others ("Pepsi Legacy Book" 15). PepsiCo sponsored sports and musical events, invited young people’s idols in its advertising, presented Pepsi as a permanent attribute of youth parties. In 1986, PepsiCo merged "7Up International" and became the world’s largest producer of soft drinks. The company’s new commercials "Nothing Else is a Pepsi" reached the highest ranks and won the top prizes at the prestigious Cannes advertising festival.

In 1996, Pepsi and MTV have signed an agreement on further cooperation. Right after it, PepsiCo launched its "Blue Project" when Pepsi’s bottles and cans became blue-colored. Another PepsiCo’s advertising solution was the history’s first commercial recorded in the outer space. In 1998, PepsiCo acquired Tropicana, the U.S. largest producer of natural juices and in 2001 – Quaker Oats, the company for the cereals and flakes production. In 2010, PepsiCo has teamed up with leading bottle-companies – The Pepsi Bottling Group (PBG) and PepsiAmericas. As a result, the company became the second largest (after Nestle) food group in the world. Nowadays, PepsiCo produces a variety of foods, constantly expanding its product portfolio at the expense of useful and healthy food and beverages.

According to FundingUniverse, The PepsiCo Corporation consists of PepsiCo International, Frito-Lay North America, Quaker Foods North America, and PepsiCo Beverages North America. Also, PepsiCo owns the following brands: Pepsi, Tropicana, Doritos, Lipton Iced Tea, Aquafina, Mirinda, Frappuccino, Lay's potato crisps, Gatorade, Mountain Dew, Wotsits, Snack-a-Jacks, Quaker Oats, Sugar Puffs, Quavers, Aunt Jemima's, and some others. In 2009, PepsiCo’s revenues amounted around 60 billion dollars, and the retail sales of every of its 18 mega brands were more than billion dollars per year. Today, the company is represented in two hundred countries around the world and employs about 285 000 people.

One of PepsiCo’s strengths is a variety of its product line, which includes cold teas, juices, bottled water, breakfast snacks, cakes, and semi-manufactured food. Considerable assortment of the company’s products, coupled with multi-channel distribution system, helps to isolate PepsiCo from the permanent changes of the business activity. Another company’s advantage that makes it stand out of the rest of the companies is its distribution channels. PepsiCo delivers its products straight from manufacturers to consumer stocks and retail stores.

As stated in InfoRefuge, PepsiCo’s global mission is to be the world’s leading company focused on ready-made foods and beverages. It strives to provide profits to its investors by creating opportunities for growth and prosperity for its employees, business partners, and society in the regions where the company is presented. In order to achieve this goal, PepsiCo should follow 3 main principles: integrity, consistency, and fairness. One of the PepsiCo’s main features is its opportunity for the extension that is a way to avoid the U.S. markets’ dependence. The company has already taken the number of measures to enhance and strengthen its Lipton Tea co-production contracts with the Unilever, which helps PepsiCo to adapt to the customer’s changing lifestyles.

The Coca-Cola Company is PepsiCo’s principal rival in the soft drinks market. The history of the competition starts in 1932 when Coca-Cola owners accused Pepsi owners in fraud. The conflict was escalated more in 1975 when the open challenge between Pepsi-Cola and Coca-Cola was held. Public opinion voted for Pepsi, which was showed on the TV and made the strong foundation for the real war that lasts until now.

Reference for Business indicates that, in 2005, PepsiCo overtopped The Coca-Cola Company in market capitalization, which was the first time during more than the hundred years of competition. In 2009, PepsiCo’s revenues increased by 2% in comparison to the previous year while Coca-Cola’s revenues decreased by 5%. However, the company has fewer employees on its plants in comparison with The Coca-Cola Company, which indicates a relatively low PepsiCo’s employee productivity. Nowadays, the rivalry has also the political overtones as PepsiCo traditionally supports the Democratic Party while the Coca-Cola Company sponsors the Republican Party.

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Market analysis demonstrates that Coca-Cola Company owns approximately 40-43% of the U.S. market, while PepsiCo holds the amount of nearly 30%. However, different market researches will give different results, which make it difficult to get a truly accurate picture. The only certain thing is that Pepsi and Coca-Cola continue to exclude any other kind of competition in the soft drinks market, which makes it truly a two horse race. Hartley noticed that the rivalry concentrates mostly on the development of advertising strategies and attempts to widen the companies’ portfolio to capture mass market (39). InfoRefuge also characterizes this competition as a number of unethical steps such as espionage in each other’s offices, frequent complaints from both the players about their bottles and retailers being hijacked, recruiting the rival’s employees at higher rates, painting of retail outlets of each other’s overnight, and many other.

Thus, PepsiCo is one of the three largest manufacturers of the foodstuffs in the world and one of the leading companies on the quick snacks market. The company’s advertising policy was always oriented at young and energetic people. PepsiCo has a clear positioning and a considerable number of its loyal customers. The company always struggles for its independence on the U.S. markets by extending the existing range of its products and acquisitioning the other companies, which are rivals on the same product market. In terms of new global market conditions, the corporation tries to take into account its customers’ needs, wishes and requirements, which help the company to expand its spheres of influence and occupy the bigger market share of juice products and mineral water.